That's the first rule, and the others we also know all too well. Don't take candy from strangers. Don't swim for an hour after eating. Careful what you touch in the woods. Wear a bicycle helmet. If you're lost, find a policeman. Fasten your seatbelt. Don't play with matches.

Don't take risks.

All good rules, of course, but most parents know to tell their little startups that rules are sometimes meant to be broken, or at least bent. Yes, that smiling child with the missing tooth at the playground is a stranger, but he's harmless. Making a snow angel could result in the sniffles, but let's do it anyway. Sure, after your bike's training wheels are removed, you might fall; but then again, you might not.

Not taking a risk is taking a risk.

Starting a business is a risk in itself, but in a way, getting a new company off the ground is the easy part. If you started with little, you had little to lose. But once you have employees-whether it's five or 500-what you do or don't do may affect the lives of them and their loved ones. You have customers. Suppliers. A reputation. A bottom line that, if not cared for, could lead you back to the bottom. Take a risk now, and everybody may suffer the consequences.

Or reap the rewards.

We talked to three entrepreneurs who embrace risk even more than your average business owner does-taking leaps when the economy is sour, betting on unproven businesses and trusting their guts for all their major decisions. Take a look-if you can stomach it.

Go for Broke

There are countless entrepreneurs taking enormous risks every day. But let's begin with Ramin Kamfar, 38, who last year grew his Eaton, New Jersey-based company, New World Coffee-Manhattan Bagel Inc., from a robust $40 million-dollar business into a $400 million one, which makes it the nation's largest bagel bakery chain, according to The Industry Standard magazine.

Kamfar has accomplished this by taking what many entrepreneurs would consider a major risk, particularly these days: New World spent $160 million to buy a bankrupt company, Einstein/Noah Bagel Corp., which was in debt to the tune of $30 million. In fact, over the years, Kamfar's company has made a habit of buying bankrupt bagel chains, including Manhattan Bagel Co., Chesapeake Bagel Bakery, New York Bagel Enterprises Inc. and its subsidiary Lots a' Bagels. Kamfar often says he wants to become "the Starbucks of the bagel industry."

But ask Kamfar about the risks of buying up bankrupt bagel chains, and he doesn't see it as dangerous. "Risk is part of any business, and it's inherent in any job, whether you're an entrepreneur or a midlevel manager," says Kamfar. "The trick is to learn to manage that risk and to make sure that all risks are calculated risks." He points out that Einstein Bagels spent $600 million creating its bagel empire. New World purchased the 465-unit chain for a relative bargain: $190 million, when you add in Einstein's debts.

Still, these are bankrupt companies he's buying. No worries, says Kamfar. New World is structured so if a new addition to the business doesn't turn around, it won't bring ruin to the overall enterprise. "One book I re-read all the time is The Art of War [by Sun Tzu, Oxford University Press]," says Kamfar, "and one of its central messages is: 'Don't get defeated.' While that may sound simplistic, or even silly, it's actually very profound. As you make your bets, don't do anything that will allow your company to go under. Make certain you always have a Plan B."

ISN'T THAT DANGEROUS?
What's a stupid risk, and what's a calculated risk? When it comes to your business, only you can determine that. But if you're trying to figure it out, try following these five steps.

1. Determine the worst-case consequences of taking the risk. If you can't live with the consequences, then it's probably a stupid risk, and you need to hatch a contingency plan or retool the risk so the possible catastrophic results can be downgraded to at least just "bad."

2. Research the risk you want to take as much as possible. Wise entrepreneurs look-or at least glance-before they leap.

3. Seek advice. Whether you hire a consultant, discuss the risk with your employees, or talk it over with a friend and get some feedback.

4. Ask yourself: "Will I lie awake at night for the next several years, wishing I had taken this risk?"

5. Now ask yourself this question: "Is not taking a risk a bigger risk than taking it?" If the answer is yes, then what are you waiting for?

Plan B

Judy Estrin is all in favor of a Plan B, and she probably wouldn't mind a Plan C. Estrin, 47, is a serial entrepreneur. She and her husband, Bill Carrico, 52, have been starting businesses since 1981, when they formed Bridge Communications, which made computer hardware and merged with 3Com in 1987. Then they moved on to start Network Computing Devices in 1988, going public in 1992; and in 1995, they created Precept Software, which was purchased by Cisco Systems three years later. Estrin, an engineer as well as an entrepreneur, serves on the boards of Federal Express, Disney and Sun Microsystems.

Estrin is now CEO of the couple's latest company, Mountain View, California-based Packet Design, founded in 2000. The new firm launches startups-taking risk to a seemingly foolish degree, especially today. But the first company Packet Design launched, Vernier Networks, which develops software that helps network managers protect wireless local area networks from intrusion, raised more than $10 million from investors last year. Everything seems to be off to a roaring start.

But like Kamfar's, Estrin's type of risk-taking is analogous to a stuntwoman driving a car into a brick wall: It's less dangerous than it looks because of all the precautions taken. Packet Design relies on plenty of internal research before sinking finances and energies into a startup.

"You have to believe in your convictions, but that doesn't mean you follow them blindly."

"I believe in calculated risks and known risks," says Estrin, who surely is thinking of a few dotcommers who have come and gone. "There are a lot of entrepreneurs who say 'Let's jump into it and let's not worry about it.' I think we have been much more about understanding what the risks are, and then making the right trade-offs and deciding which risks to take, as opposed to just thinking that taking a risk is always the right thing to do."

One of Estrin's biggest risks came early in her career, when she and her husband had secured investments to create Bridge Communications, which relied heavily on Ethernet technology. At the same time, a technology research firm concluded that broadband technology would stomp the Ethernet into the ground.

"The investors were very concerned," recalls Estrin. "But we stood fast and said, 'That's not going to happen.' We ended up being right, and we really did believe we were right." And that belief is crucial to taking a risk, Estrin adds. "You have to believe in your convictions, but that doesn't mean you follow them blindly."

Peering Over Cliffs

If you're the parent of a 12-year-old boy and you
haven't taught him about risk, chances are Todd McFarlane
already has. The comic book artist, known primarily for the
Spawn series, has created an entertainment empire that
features many risk-loving superheroes. So it's not surprising
that when you ask McFarlane about the risk, he comes up with some
nice visuals.

An entrepreneur, he says, needs to take a leap of faith every
once in a while: "The average person will tippy-toe up to a
cliff, look over and see that it's a 200-foot drop. They'll
see that there are mattresses down there, but they'll ask all
these questions, and maybe if you talk to them long enough,
they'll make the jump-if they have three parachutes on their
backs.

"The entrepreneur, when he sees a cliff, actually gets back
50 feet so he can get a running start. He flies over the cliff, and
about half way down, then he'll ask the question:
'Oooh, I wonder if there's anything to land on.' Fear
of failure is the least of [an entrepreneur's] concerns because
we're motivated by potential, by something else we think
we're going to get."

"Fear of
failure is the least of [an entrepreneur's] concerns because
we're motivated by potential."

McFarlane, 41, knows what he's talking about. His first
serious risk began with his decision to walk away from a job that
made him the country's best-paid comic book artist, drawing
Spider-Man for Marvel Comics. He left in 1991 to create his
own comic book series-Spawn, which went on to gross $85
million as a feature film in 1997. The Spawn series-and 35
other comic book titles-have sold more than 150 million copies
worldwide since 1992.

McFarlane is CEO of Todd McFarlane Productions, parent company
of Todd McFarlane Toys, Todd McFarlane Entertainment (film and
video), and McFarlane Design Group (photos and designs). And while
McFarlane won't discuss hard numbers, his businesses reportedly
bring in an annual $50 million. McFarlane, meanwhile, is said to be
worth $130 million, which means he can make his own fantasies come
true: In 1998, he spent $2.7 million to purchase Mark McGwire's
70th home-run baseball.

But none of this would have happened without taking what many
entrepreneurs might consider a big risk. Todd McFarlane
Productions-which staffs around 120 people and is based in
Phoenix-has never relied on market research in creating their toys
and comic books. McFarlane just relies on his gut.

"I've done some marketing and focus groups through
Hollywood and [with] other companies, and I hate to say it, but I
thought most of it was a waste of time," says McFarlane,
"because what ended up coming out of most of it was common
sense. For all the time and energy and resources you have to put
into it to grasp the three or four nuggets that you can use,
I'd rather go to the school of hard knocks. I know who my
audience is, because for the longest time, I was the audience. So
most of what I make, I say, 'What would I personally
want?'" And though McFarlane admits that he doesn't
succeed every time, "you apply what you learn to the
future," he says.

If you're still nervous about jumping off that proverbial
cliff, you could always practice first in a way that won't
necessarily affect your business. Kamfar did, when he was a
21-year-old spending a year in England between college and graduate
school. He went fire-walking.

Feel like keeping your socks and
shoes on? Then forego the fire-walking and instead sign up for
flight training to better your business
skills.

"One of the first things you had to do was sign a waiver
acknowledging that you understood you might catch on fire and burn
off a limb or die," says Kamfar, who describes walking on hot
coals as "very liberating."

But you should never fire-walk-or take a giant risk when your
company is at stake-if you're truly frightened. "If
you're afraid to take a risk, that fear is trying to tell you
something," says Kamfar.

That's because risk-taking is indeed something of an art
form, and it requires practice. And the more successful you become,
the more complicated it gets to take a risk. "Here's what
I've lost, and it bugs me," says McFarlane. "When we
were small and confined, I could self-indulge more. Now I have to
put on the 'Todd, the CEO' hat and ask if what 'Todd,
the artist,' likes is prudent for the well-being of the
company? Sometimes, the answer is no."

That may be something that gives you pause. Take an unnecessary
chance, and your company could end up the size of a continent.
Next, you'll be trying to decide how to market a comic book
called Creech 2: Out for Blood, and you may lie awake at night,
wondering what sort of lighting you should put on your $2.7 million
baseball.

But isn't it worth the risk?

Every day, as a freelance journalist in Loveland, Ohio, Geoff
Williams is risking his life in a world of danger and intrigue.
Why, just last week, he dropped a stapler on his foot. "This
office is a deathtrap," he says.